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Credit cards: a small victory for me

credit cardsI did it. I have managed a whole month without using my credit card once. This came about after I got a big (for me) bill after Christmas which I paid off in full at the end of last month. I decided that the small amount of benefit I got from using my card for spending – gift vouchers – wasn’t worth it. Even though I paid off the balance in full what I didn’t like was the surprise of having a big bill to pay for things I’d bought and forgotten about many weeks earlier.

It was difficult to go cold turkey on the card because January was a very expensive month – an MOT and service on the car; a new fence; a tax bill and a dentist’s bill – all of which were unavoidable and definitely not fripperies. Added to that work was scarce in January so it did mean dipping into the savings. But as I earn 0.75%interest on them it’s a small sacrifice. It’s certainly much better than building up a debt on the card. The APR on the card is 18.9%. If I only paid back the minimum each month then the cost would be huge and take years to clear. There’s a brilliant calculator here which shows what happens if you just make the minimum payment every month.

However, despite my pride in not using my credit card for a whole month, I might well spend on it again this month. This isn’t because I am happy to be in the red – but because I want to keep the card. I’m not sure if it actually happens, but I’ve read that if you don’t use your credit card fairly regularly you risk it being cancelled. And it’s a good idea to have a credit card because the consumer protection offered if you pay on one is better than on a debit card. I would, for example, always buy flights on a credit card because if the airline went under I’d be protected by the Consumer Credit Act. Added to that, if I wanted to hire a car when on holiday then often car hire firms will demand you have a credit card. So this month I’m going to put a small payment on the card. But I won’t ever let it build up to the kind of sum which makes it a burden, not a bonus.

And see our SMM guide to credit cards here.

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Saturday, 20 April 2019